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American Suzuki: The Bankrupt Elephant in the Room

Because we’re so centered around cars, it’s very hard to get the big picture sometimes: that the auto industry is an important but relatively small cog in the global machine. General Motors makes a lot of really big pickups and cars, while Apple Inc. makes a lot of really small electronic devices, yet the technology company has a market cap 12 times larger. That’s why it’s not uncommon for a construction company or a motorcycle maker to go into the carmaking business, sometimes with disastrous results.
You see, to be successful in this competitive market with small profit margins, you’ve got to sell cars to a global audience, updated them about once a year with tech and invest millions in advertising. With the death of American Suzuki Motor Corp., it’s become painfully obvious that the smaller carmaking businesses can’t survive. This is the bankrupt elephant in the room which we are now forced to talk about.

But why does this happen? The reason you can’t think of a good Suzuki car name right now is because they actually make motorcycles, some of the best in fact. They also have some good kei cars to sell to the Japanese, and their Maruti Suzuki business is the envy of the Indian market, but that’s about it. With such a limited repertoire, they couldn’t afford to make a mistake, but in fact they made a lot of them in America.

The reason why American Suzuki Motor Corp. failed is because the business was controlled not from American shores, but directly from Japan. There were never any dealer meetings to decide what sort of cars they should make next and no big engineering changes to cater to US consumers. In one of the most awful cases of market disconnects, Chairman Osamu Suzuki could dictate that Americans wanted the Kizashi and the SX4 and that was the end of it! The same Osamu believed to be responsible for the VW deal going South.

Could you imagine what it would be like if GM suddenly decided German consumers wanted to buy only pickups and huge Cadillac sedans?

Suzuki’s recipe for disaster was seen before in the past, when other small Asian automakers tried and failed to establish a foothold in the United States. Daihatsu, Isuzu and Daewoo are a few names that spring to mind, but the formula can be seen in Europe as well. In my mind MG has a slim chance of lasting in Europe, yet other Chinese ventures seem convinced they can sell their strange new cars as well. They have no heritage, no brand loyalty, copied designs and outdated engineering.

American Suzuki is like one big, dead, bankrupt elephant sitting in the middle of the room. It’s so obvious that we really do have to see why it’s dead. An ill conceived retailing plan, bad leadership, a crappy dealer network, outdated vehicles and especially the lack of marketing funds are all to blame. Selling a Suzuki SX4 in America is a bit like selling toys at a retirement center for seniles by leaving them on the floor.

It’s worse than promoting your cars by saying they all do 40 mpg. It’s making cars that nobody will buy, no matter what the mpg is.

Suzuki is a huge name in the motorcycle world. Everybody knows their bikes are fast, but unlike Honda who made a similar transition, they couldn’t figure out how to make cult cars.

Let’s look at what this bankrupt elephant in the room has been eating to make it so sick. In 2004, General Motors and Suzuki bought the bankrupt Korean automaker Daewoo Motors. American Suzuki was ‘lucky’ enough to receive the two sedans, which somewhat helped its cause. Bloated by its success with the rebadged Chevrolet Lacetti, they introduced SX4 and SX7, both all-new, both ill-fated disasters. They were followed in 2009 by the Kizashi mid-size sedan. The car was developed on the Nurburgring but arrived in the middle of the economic crisis, as American Suzuki sales halved, and it failed to make a dent in the market.

So here we are in November 2012, as Suzuki announces its US division is going into bankruptcy. By offering dealers money to voluntarily close, the company slams the nail in the coffin of the underfed elephant that chocked on stupid corporate decisions. Their failure, a reminder that in business, it’s better not to try at all than to try and fail, should serve as a notice to all those breeding potentially bankrupt elephants.
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About the author: Mihnea Radu
Mihnea Radu profile photo

Mihnea's favorite cars have already been built, the so-called modern classics from the '80s and '90s. He also loves local car culture from all over the world, so don't be surprised to see him getting excited about weird Japanese imports, low-rider VWs out of Germany, replicas from Russia or LS swaps down in Florida.
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